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Immigrant Underemployment is Costly for Canada, CIBC Says

Aug 13, 2012 1:40 pm ET

By Nirmala Menon

Bloomberg

Immigrants in Canada are underemployed and paid less than Canadian-born workers, a phenomenon that’s costing the economy over 20 billion Canadian dollars in forgone earnings, and is probably a significant factor in Canada’s productivity gap with the U.S., according to a report from CIBC World Markets.

Newcomers to Canada may be more educated now, but they only earn about 60 cents on the dollar relative to their Canadian-born counterparts. That compares with 80 cents on the dollar earned by those who arrived in the 1970s, the report says. The earnings gap is also narrowing at a much slower pace.

The crux of the issue is a mismatch between the skills that an immigrant brings and those the country needs, according to the report’s author, Benjamin Tal. Furthermore, immigrants are arriving with less proficiency in English or French, Canada’s official languages.

“This is not an efficient market,” Mr. Tal, who is deputy chief economist of CIBC World Markets, said in an interview.